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  • Laura Donovan

What’s the difference between an IRA and a Roth IRA?

An IRA stands for individual retirement account. There are two types of IRA's: Traditional IRA’s and Roth IRA’s.


The difference between the two lies primarily in how the accounts are taxed.

Contributions to a Traditional IRA are generally tax deductible in the year the contribution is made, grow tax deferred, and when you take money out in retirement generally you will pay taxes then on those distributions.


Roth IRA’s work the opposite in regards to taxation. There is no tax deduction today, but when you take money out down the road in retirement, your distributions are tax free.


A few other key points: Roth IRA’s have income limits – so if you make over a certain threshold you might not be able to contribute to a Roth. For 2021, as a single filer, that number is $140,000 a year in adjusted gross income, and $208,000 if you file taxes jointly.


Both a Traditional IRA and a Roth IRA also have contribution limits – if you’re under the age of 50 – for 2021 - $6,000 a year is the most you can save into your Roth or traditional IRA. If you have multiple Roth and / or IRA accounts that $6,000 limit is combined between them all.


Tax information is based on the presenter's understanding of current tax laws and does not constitute tax or financial advice. Please consult a qualified professional regarding your individual circumstances


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What Our Lawyers Want Us Say:

Laura Donovan is the Registered Representatives of, and Securities and investment advisory services offered through Hornor, Townsend & Kent, LLC (HTK), Registered Investment Adviser, Member FINRA/SIPC.187 Danbury Road, 2nd Floor, Wilton, CT 06897  (203) 966-2636. HTK is a wholly-owned subsidiary of The Penn Mutual Life Insurance Company.

Sonder Financial is independent of HTK, LLC. HTK does not provide legal and tax advice. Always consult a qualified tax advisor regarding your personal tax situation and a qualified legal professional for your personal estate planning situation.

Our representatives are licensed and registered in our resident state of CT, as well as additional states. Not and offer or solicitation in any state where reps are not properly licensed.

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